California walnuts targeting China

It is no secret China is rapidly becoming a major consumer of what the developed world produces.

Walnuts are one of the things the California walnut industry wants to introduce more of into this burgeoning Chinese market, which is the reason a coalition of California walnut industry representatives visited the country recently to learn more about export opportunities to the world's most populous nation.

China grows walnuts, but quality and yield lag far behind California, according to Michelle McNeil, international marketing director for the Walnut Marketing Board and the California Walnut Commission, Folsom, Calif. The opportunity for California to increase exports of walnuts to the country is very promising.

“China is changing very rapidly,” she says. “Economic growth increased by 11.7 percent in 2007. There are over 100 cities that have over a million in population now.”

There are three very stratified levels of consumers with the younger generation making up the bulk of spenders, according to McNeil.

“The change in culture is driven by Western influence,” she says. “There are more and more fast food chains and a tendency toward luxury products. However, price consciousness is still there. There is still that undertow in that they are looking for relative value for the money.”

Key demographics indicate a huge potential market for the U.S. no matter what commodity is being considered. The latest figures show 1.3 billion consumers in China.

“Nearly half of them live within urban centers,” McNeil says. “And although per capita disposable income within the urban population is only about $1,500 at this point, the sheer numbers of people constitute a huge market.

“The middle class is driving a lot of what we're seeing in the dynamics of China,” McNeil says. “They are made up of 29-40 year olds. Right now 19 percent of the inhabitants are considered middle class, but by 2020, it's projected to be 40 percent.”

“Walnuts are the number one snack nut in China,” McNeil says. “They are also used to a small degree in food additives.”

Exports to the country are looking more favorable as import and value added taxes are coming down. Additionally, demand in bakery products, as well as hotel, restaurant and industrial (HRI) uses continue to grow.

“Due to Western influence, the trend in increased interest in baked goods for breakfast is expected to continue, as well as special occasions,” McNeil says. “That goes back to the HRI sector. It's a new thing in China to celebrate a child's birthday.”

“China is very excited to work with us because of our consistency and quality,” McNeil says. “Reliance on imports will continue to increase.”

Many of the walnuts grown in China are planted rather haphazardly along hillsides and in odd configurations, according to Peter Jelavich, Sutter County walnut grower who also participated in the trip to China.

“The Chinese are planting more trees because the government is giving them a financial incentive to do so,” he says. “Walnuts are classified under the forestry department, as opposed to agriculture. Therefore, the financial incentives to plant trees to clean up the environment are significant.”

Even with increased plantings, the production per acre remains relatively low compared to California's standards. “It's only about 300-400 pounds per acre,” Jelavich said.